Union shuts down Hostess bakeries

esh_gaNovember 16, 2012

"The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the company's largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), initiated a nationwide strike that crippled the company's ability to produce and deliver products at multiple facilities," Hostess said in the statement.

Truly tragic. While I believe that unions serve a valuable purpose, clearly they shot themselves in the foot this time.

In a statement, Hostess said its bakery operations have been suspended at all plants and that it would lay off most of its 18,500 workers to focus on selling its assets. It said it has filed a motion with the U.S. Bankruptcy Court seeking permission to close its business and sell its assets, including 33 bakeries and 565 distribution centers.

The move shuts down one of the nation's oldest and largest producers of baked goods. Founded in 1930, it produces such well-known brands, aside from Twinkies, as Ding-Dongs, Ho Ho's, Sno Balls and Donettes, not to mention Wonder bread, which the company says is the best-selling white bread in the United States.

I expect that another bakery will ask to buy the recipe for some of their products, especially the bread since it is such a winner.

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.

quote from the other thread ... reminds me of Bain Capital. Sounds like the vultures got the twinkies.

"Hostess filed for bankruptcy in January, the second time in the last eight years. When the company emerged from bankruptcy the first time, it was able to do so because its union workers agreed to $110 million in concessions and facility closures that cost about half of the unionized workforce their jobs."

After the workers agreed to the concessions, three private equity companies, Ripplewood Holdings, Monarch Alternative Investmenes, and Silver Point Capital, took control of the company and pledged to invest in modernizing the facilities that stayed open and rebranding the company's signature products, Wonder Bread, Twinkies, Hostess Cupcakes, etc.

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses."

Yes I can see why the "talking point" of the day would be blame the unions.

Frankly as a foodie I would hardly consider Hostess as "bakery", and yes I bake ... which I guess earns me and others that bake the scorn of some.

Still spouting off?
The election is ovah!
The people of Ohio and across the nation know that the auto loans were the courageous and correct action to take to save that industry.
Only a few sour grapes like yourself continue to wine.

Yes, they're hyrogenated (see my above comment). Jay Leno recently bought a Twinkie over the internet that dated from the 1990s, tried it on the air and said it tasted the same as if new.

The labels of any and all products that may contain hydrogenated ingredients should be read before purchase, passed over if they do. Anything like frosted baked goods, candies or processed cheeses that contain cement-like or otherwise finely textured components are highly likely to be hydrogenated. But I find hydrogenated oils listed in a high number of so-called foods, not always just obvious suspects.

Me too, Carol, although I generally use the "rather stick a fork in my own eye" reference. :-) Walmart has heinous employment practices and an even more corrupt supply chain. Mostly, though, I simply cannot fathom buying actual food in a place that reeks of PCBs and cheap air deodorizers. Blechh.

Good riddance to a fake, unhealthy product with no nutritional value... however, that's a lot of employment to throw out the door in the name of vulture capitalism. Ain't America grand... when you can make a fortune by purposely losing money and gaming the system...

Yes they were "Bained", but this and all the stories on the web already have the talking point in motion that the big bad union shut them down. Not one article I found even mentions the venture vampire capitalists that sucked the life out of the twinkie.

In fact the comments after the articles are savage towards the employees that lost their jobs, pensions and probly' their homes etal next.

Don't unions decide things by vote? I've never been involved in one, have no opinion of them one way or another but thought they operated by majority rule.

After thinking about this for a few days, it's hard to believe the surface story, that a huge conglomerate like this is such a house of cards. Twinkies or Wonder Bread having a problem with a baking union should not affect the whole parent company. Isn't that why they make divisions? Did all of the divisions use the same union? Are there no competing unions? The cliche about putting all of one's eggs in one basket seems to have been ignored if this is really what brought them down. Plenty of people would happily bake Twinkies and bread for minimum wage, especially in places where the cost of living is not so high.

Totally agree, Ohiomom. The disparity in wages for the average workers who actually do all of the work vs. the corporate positions in their companies is atrocious. How do these companies expect people to patronize them if they can't earn enough to pay their bills after working all week?

I read ConAgra expressed an interest. So too did Mexican mega bread maker El Grupo Bimbo. I wouldn't be paying big bucks for a pack of Twinkies on Ebay just yet.

I never liked them; I put them in the same category as Peeps. Unsatisfying and to be avoided at any price. I did however, like the chocolate cupcakes if I remember that last one I had sometime in the 50's.

Oh, Twinkie with your golden hue,
You have delicious goop in you.
There you are! Were you waiting long,
Between Sno-balls and stale Ding Dong?
...
My friends all think I'm kinda kinky
Cause my role model is a twinkie.
But they don't know what we've been through.
Dear Twinkie, I can count on you.

I tell my troubles as I bite.
You never tell me, "That's not right."
You listen to each foolish fear,
Then slowly, deliciously disappear.

I hold you close when we're alone
And think the thoughts that are my own.
Then turn to you, my dear sweet yummie.
You clear my mind, tickle my tummie.

Your outside is a little plain,
But inside you are "mellow lane."
I like you better than these folks,
Who look at me and then make jokes.

People should be more like you.
You don't judge the things folks do.
Inside is where your beauty lies.
Within the plain, there's sweet surprise.
Ã¯Â¿Â½Grandpa Tucker

Even as it blamed unions for the bankruptcy and the 18,500 job losses that will ensue, Hostess already gave its executives pay raises earlier this year. The salary of the companys chief executive tripled from $750,000 to roughly $2.5 million, and at least nine other executives received pay raises ranging from $90,000 to $400,000. Those raises came just months after Hostess originally filed for bankruptcy earlier this year.

hostess is not over yet the bankruptcy judge has sent both sides the union and company to Mediation.
The judge has put hold any liquidation on hold.
so who know is they both play nice Twinkies could be back in week or to.

This is 2012, we watch what we eat, Twinkies, Ding Dongs and Ho Ho's are no longer a normal part of the American lunch box diet. Most companies change with the times but this company did not.

Instead they pulled a Bain, added dept and instead of moving forward with good management and new products the employees will take a major hit and the very bad managers who couldn't lead the company into the future will get raises and great severence packages. There needs to be laws to keep this from happening over and over again. You should not be able to go bankrupt after paying inflated wages and bonuses to your management while your labor force is screwed.

The demand for snacks is incredible, but many are opting for much lower priced on-sale, store brand and non mainstream brand alternatives which are subjectively almost as good, as good, or better.

Just the sheer number of different brands and varieties of snacks makes it an extremely competitive market.

The same applies to bread. The variety and competition is incredibe. More and more people are also shopping for price. Locally, Friehoffers and store brand white bread outsell Wonderbread by large margins, plus they have more frequent sales and promotions.

Sometimes businesses that succeed are closed down.
That's entirely at the discretion of the owners.

Then why blame the union? If it was a successful business that they don't want to run anymore, why blame the union for causing its failure?

If it's not successful because they haven't kept up with what the consumer wants, why blame the union?

The union already agreed to concessions the 1st time they went through bankruptcy. Yet the executives gave themselves huge raises. Now they are taking big bonuses while they shut it all down. I know, you don't see the problem with that. A lot of people do see the problem with that.

"If it's not successful because they haven't kept up with what the consumer wants, why blame the union?

The union already agreed to concessions the 1st time they went through bankruptcy. Yet the executives gave themselves huge raises. Now they are taking big bonuses while they shut it all down. I know, you don't see the problem with that. A lot of people do see the problem with that."

Well said!

You can't tell me Twinkies weren't making a profit, for everybody but the people actually baking them. A lot of people eat a lot of Twinkies, no matter what the general consensus may be. A profitable company going out of business is definitely a curiosity worth investigating.

The bankrupt baker told The Wall Street Journal that money taken out of workers' paychecks, intended for their retirement funds, was used for company operations instead. Hostess, which was under different management at the time the diversions began in August 2011, said it does not know how much money it took.

Hostess executives have spent the last several weeks crusading for the right to cut employee pensions while also divvying up retention bonuses for company executives who will oversee the company's liquidation.

Now it turns out some of those pensions have already been diverted to cover other costs.

More thieves, who think that everything they steal is rightfully theirs.

"The bankrupt baker told The Wall Street Journal that money taken out of workers' paychecks, intended for their retirement funds, was used for company operations instead."

Sounds an awful lot like what our dear "progressive" government is doing with the Social Security money that they took out of my paycheck for the past 50 years or so.

With pretty much the same result. Diverted all that money to their own interests and left us bankrupt.

Moral: if you want to have any hope of keeping your hard earned money, don't give it to ANYBODY to hold for you. NOBODY can watch after my money better than ME. Certainly not you and your elected officials.

When does Obama leave for his Hawaii vacation? Dodd and Frank, they're doing OK with their retirement? Bill Clinton still being driven back and forth in a chauffeured car between his office and his nice home in that wealthy enclave in New York?

I'll still take my chances in the stock market. Overall, it does better than the alternative.

I'll still take my chances in the stock market. Overall, it does better than the alternative.

Dunno about that, Hay.

If the alternative is being a politician and living that guaranteed, chauffeured, extremely comfortable retirement... seems like their retirement plan is much better protected than the stock market OR the average shmoe's pension. They ain't hurtin', if you know what I mean.

Moral: if you want to have any hope of keeping your hard earned money, don't give it to ANYBODY to hold for you. NOBODY can watch after my money better than ME. Certainly not you and your elected officials.

*

Amen.
Amen.
Amen.

Unfortunately, FDR believed that the the government was smarter, more disciplined and more responsible than citizens were, and so we have had confiscated earnings with the promise of getting it back in our old age.

Decades of Democrats, and some Republicans, have agreed with this takeover of our individual responsibilities to care for and provide for our own retirements.

I can't tell you how many times I've heard older people complain that they just can't make it on social security.
DUH.

It wasn't meant to provide for every need in retirement.
Unfortunately, that's how the government sees so many social programs.

Personal responsibility has become a dirty word--and because it has, now look where we are.